The revenue accruals to the Federation Accounts in the first half of the year were lower than the projected figures in the year’s budget by about 49 per cent. Government had projected N5.368 trillion revenue flows in its 2017 fiscal framework for the period under review.
This is even as the federal, state and local governments in the country shared a total sum of N4.545 trillion as Federation Accounts Allocation Committee’s disbursements for the nine-month period ended September this year.
These facts were contained in the latest Quarterly Review of the Nigeria Extractive Industries Transparency Initiative (NEITI)
The NEITI report indicated that Nigeria’s revenues in the first half of 2017 were about 49% lower than budgeted figures. Specifically, while government projected N5.368 trillion revenue flows in its 2017 fiscal framework for the first six months of the year, actual inflows were N2.712 trillion. From the report, Government’s half year projections were 2.667 trillion for oil and 2.701 trillion for non-oil revenue.
The NEITI reported that “actual oil revenue was N1.587 trillion, representing a shortfall of N1.079 trillion, implying a 40.4% underperformance. Non-oil revenue fared slightly worse, as only 41.6% of the projected revenue was realized. Actual non-oil revenue totaled N1.125trillion, indicating a shortfall of N1.575 trillion.”
Similarly, the report further showed that while government projected that the non – oil sector would outperform the oil sector, the target was not achieved as the oil sector performed better in revenues generation, raking in N1.587 trillion as against N1.125 trillion for the non-oil sector. The Federal Government had hoped to rake in N2.542 trillion for the first half of 2017 but the actual revenue accruals stood at N1.497 trillion.
With the findings on revenue inflows, the oil sector accounted for a larger part of the shortfall with a 60% drop while the non – oil sector underperformed by 49%.
The report clarified further: “Budgeted half-year inflows from the oil sector was N1.061 trillion but actual oil inflows to the federal government was N414 billion. The federal government’s budget estimated half-year non-oil revenue inflows at N705 billion but realized only N352 billion, indicating a 49% shortfall.”
The report’s comparative analysis of the revenue collections on year-on-year basis showed total revenues were higher in the first half of 2017 than the corresponding period of 2016 by 22 per cent, with all sources of oil revenues with the exception of rents recording positive improvements in 2017 than 2016 first halves.
This is similar to the trend in the non – oil sector revenue figures indicated that Value Added Tax (VAT) was the largest contributor to the revenues with a 16% increase over 2016 figures. The report attributes the development to “increase in economic activities, expansion in the tax base and the improvement in performance of revenue collecting agencies.”
On the revenue disbursed to the tiers of government, the three tiers of government got N4.545 trillion in the nine month period undrer review. A breakdown of the distributions on quarter-by-quarter basis reflected that they shared N1.411 trillion compared with the N1.377 trillion disbursed in the second quarter and N1.757 trillion for the three-month period ended 30th September, this year.
The NEITI report also showed that between January and September 2017, the federal government received the highest allocation of N1.851.32 trillion, followed by state governments with N1.509 trillion and the 774 local governments with N913.8 billion.
DPR, Customs and the FIRS got N271.78 billion as cost of revenue collections.
A further analysis of the FAAC distributions reflected that the sums shared by the three tiers of government were higher in the third quarter of 2017 For instance, while the Federal Government got N549.41 billion in the second quarter of 2017, third quarter figures were N752.79 billion, representing an increase of 37.02 per cent.
The states and local governments got N586.58 billion and N363.98 billion in the third quarter as against N467.13 billion and N280.42 billion in the second quarter respectively. This implies that increases in distributions for the two quarters for the two tiers of government are 25.57 per cent and 29.80 per cent respectively.
The NEITI attributed the reason for the increases in FAAC disbursements to the three tiers of governments in the third quarter to “positive developments in the oil sector – evident from resurgent oil prices and increased production levels. The third quarter also represents the summer season when global oil demand and consequently oil prices are generally higher than other times of the year and this could possibly explain the higher revenue accruals to the Federation account in these third quarters”.